The Swedish third way: an assessmentof the performance and validity of theRehn–Meidner model
This paper analyses the functioning of the Rehn–Meidner model in Sweden and thevalidity of the model’s underlying theory. Both sceptics and friends of ‘the Swedishmodel’ have exaggerated the effects of active labour market policy and solidaritywage policy on employment, inﬂation and growth. However, these policies havecontributed to the reduction of hysteresis effects and wage differentials in Sweden.Furthermore, Swedish experiences conﬁrm the Rehn–Meidner view that positivedemand shocks and expansionary macroeconomic policies make it difﬁcult tocombine full employment with price stability, economic growth and equity even if central wage negotiations are coordinated and trade unions willingly accept wagerestraint.
: Rehn–Meidner model, Wage policy of solidarity, Labour market policy,Phillips curve, Productivity growth
: E31, E63, J31, O11
During the early post-war years, two Swedish trade-union economists presented a uniqueeconomicandwagepolicyprogramme,theRehn–Meidner model,aimedatcombiningfullemploymentandfairwageswithlowinﬂationandhigheconomicgrowth.
RudolfMeidnerwas then the head of the Economics Research Department of the LO (The SwedishConfederation of Trade Unions, The Swedish TUC) and Go¨sta Rehn was the depart-ment’s leading macroeconomist. The Rehn–Meidner (R-M) model recommends a re-strictivemacroeconomicpolicy—principallyindirecttaxation—togetherwithawagepolicyofsolidarity andanactivelabour marketpolicy.RehnandMeidner did notinvent anactive
Manuscript received 17 November 2006; ﬁnal version received 20 October 2007.
Address for correspondence
: Department of Economics, Stockholm University, 106 91 Stockholm, Sweden;email: firstname.lastname@example.org*Stockholm University. Numerous social researchers have made constructive comments on earlierversions, not least the late Go¨sta Rehn and Rudolf Meidner and the participants in a Nordic network oneconomicpolicywithLarsMjøset,OsloUniversity,ascoordinator.Inparticular,Imustmentionthevaluablecomments on the last draft by Eva Skult, Birger and Erika Viklund. A longer version of the paper, includingaformalisationof thewageandproductivityfunctions intheRehn–Meidner model,canbeacquiredfromtheauthor.
See Meidner and Rehn
, 1953 ; Rehn, 1952A , 1952B , 1969, 1982, 1987;Hansen and Rehn, 1956; Meidner, 1952 , 1969; Lundberg, 1985; Erixon, 2000, 2001, 2004 ,2005.
Cambridge Journal of Economics
367–393doi:10.1093/cje/bem051Advance Access publication 6 December, 2007
The Author 2007. Published by Oxford University Press on behalf of the Cambridge Political Economy Society.All rights reserved.
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